Shock to investors in Pakistan

Investors in Pakistan are bracing for a shock, US media said, as a standoff between former Pakistani Prime Minister Imran Khan, the military and the government reaches a turning point.
Heightened tensions after Khan’s arrest last week could push the IMF’s $6.7 billion bailout away, as bond managers stare down the spectre of sovereign debt default.

According to reports, the risks are rising rapidly for investors, as the turmoil is a powerful reminder of the nation’s history with 3 coups d ‘état since 1958, and a clear assassination attempt on the 70-year-old politician in November confirmed that violence could intensify.

Warnings of a significant decline in the rupee (Pakistan currency) are increasing, with some analysts expecting a further 20% drop. This year, the currency lost about 20% of its value, making it one of the world’s worst performing currencies.

For its part, Moody’s Credit Ratings said this month that Pakistan could default after June if it fails to secure funding from the IMF.